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Understanding The Credit Report

They come everyday, one after another, filling your email box with claims of quick and easy credit repair. GreedyFools know, however, that these emails are simply preying on people's desire for a quick fix to a major problem. With some 30 million Americans having less than stellar credit report ratings, there are plenty of people looking for a quick fix. There is, however, no quick and easy legal way to change a credit report if it is accurate. Although no quick fix exists to repair your bad credit rating, there are a number of ways that you can move it along in the right direction. Simply understanding a little more about how the credit rating system works will put you in a better position to improve your credit score.

First, you need to know what a credit rating is. You are given a credit score between 300 and 850 depending on a number of factors taken into account by the credit rating agencies. These numbers are used more and more by lenders (mortgage, car loan, credit card) when evaluating your credit worthiness, as well as employers, landlords, insurers and others who use it in evaluating applications. Knowing how the credit scores are determined will be useful to those with credit ratings that are considered sub-prime (560 points or lower which include consumers with little or no credit history, consumers who have filed bankruptcy within the past 10 years, those who have a terrible track record over the past seven years of paying their bills on-time, or consumers currently carrying far too much debt for their income level), but also for those who have good ratings that want to make them even better.

The first step is to get hold of your current credit reports. There are three major credit rating agencies. You can get a free credit report if you've been denied credit in the past 60 days, are unemployed, on welfare assistance or believe your credit record contains inaccurate information due to fraud. You can also receive the report for a small fee at any time. The three main credit-reporting agencies are Trans Union (800-916-8800), Equifax (800-685-1111) and Experian (800-682-7654).

Don't assume that each agencies report contains the same information. These agencies get their information from lenders and different lenders report to different agencies. Mistakes are also made, so getting a credit report from each one is the best way to make sure that everything is accurate. You can get a new combined report from all three agencies at equifax.com.

Once you have made sure that your credit reports are accurate, you can start taking steps to improve your credit rating. By far the most important thing you can do to improve your credit score is to pay your bills on time. Paying bills on time accounts for up to 35% of your credit report score with your recent bill paying history carrying more weight than your past history. That means by making all your payments on time, you can immediately move your score in the right direction. This is the single easiest way to improve your credit score.

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